The Democrats’ Covid rescue bill hasn’t even been signed into law yet, but the Republicans are using it to attack public pensions like ours in Illinois.
Because of the failure of legislators to adequately fund them for decades, public pensions are billions in debt. And while federal help might not be such a bad idea, that’s not what is in the rescue bill.
For years, states like Illinois have been hoping for a federal bailout. Illinois currently carries a mind-boggling $224 billion debt burden.
Well, Illinois lawmakers must be breathing a big sigh of relief, considering it appears more likely than ever that the federal government will pump out $350 billion to states and local governments, under President Biden’s American Rescue Plan.
Even Donald Trump wouldn’t tweet a whopper like this. Not one dime of the rescue bill will go to public employee pensions funds.
The pension rescue contained in the $1.9 trillion COVID-19 relief bill now waiting for expected House approval and Biden’s signature will go to private multi-employer pension plans and will assist workers in blue and deep red states.
Not one dime will go to public pensions.
The pension portion of the rescue bill is sponsored by Sen. Sherrod Brown (D-Ohio). It would create a Treasury Department agency called the Pension Rehabilitation Administration that would sell bonds and use the proceeds to give grants to troubled pension plans. That money would enable underfunded multiemployer pension plans to pay all benefits owed to retirees through 2051 without any cuts, giving them time to become solvent again.
Multiemployer pension plans cover more than 10 million people who regularly work for different employers, such as truckers, miners, construction workers, stagehands, and musicians. More than 1.3 million workers and retirees are in the more than 120 plans in danger of becoming insolvent, as the number of active workers contributing to them isn’t enough to cover payments promised to retirees. Many plans also lost both investments and contributing workers during the Great Recession.
“Reckless Wall Street behavior, industry deregulation, and employers’ deviant use of corporate bankruptcy have threatened the financial security of millions who’ve worked hard only to have that promise robbed from them,” AFL-CIO President Richard Trumka, AFL-CIO Secretary-Treasurer Liz Shuler, United Food and Commercial Workers International President Marc Perrone, and Joseph Sellers, general president ofSMART, the International Association of Sheet Metal, Air, Rail and Transportation Workers, said in a joint statement Feb. 27. “The current pandemic has only exacerbated the dire situation and the need for immediate action.”
More than one-third of the workers affected are Teamsters, as the deregulation of trucking slashed the number of union drivers. The Teamsters say more than 50 of their pension plans would be immediately eligible for aid if the relief bill passes. Those include the Central States Pension Fund, which has about 400,000 participants, and is projected to go broke in 2025, threatening cuts as high as 70% of benefits. Other Teamsters plans would become eligible in 2022.
Other large plans on the endangered list include the Bakery and Confectionery Union and Industry International Pension Fund, which has more than 110,000 people enrolled, and the United Mine Workers of America 1974 Pension Plan, with more than 100,000. The American Federation of Musicians and Employers’ Pension Fund applied to the Treasury Department for permission to reduce benefits in 2019, on the grounds that it had entered “critical and declining” status — projected to run out of money to pay benefits within 20 years.
But now we have a rescue bill.